Early Repayment Penalties

rob_j_4

I had a mortgage with the Northern Rock and on reading the useful messages on here decided to try to reclaim some of an early repayment penalty I had to pay Sept 2003.

They tell me that this is different to exit fees. But the penalty to me 3 1/2 years ago was 5% of the outstanding balance because I was moving house and they wouldn't continue my low rate mortgage. They wanted a new product fee and all in all I decided to re-mortgage with A&L.

Northern Rock still charged me £1250. What are my chances of getting some of this back almost 4 tears later from the greedy NR who have just posted 1/2 yr profits of £296m !!

homer_j_3

I would say your chances of reclaiming the ERC are somewhere between nothing and nothing.

These fees are to recoup the any losses by taking your mortgage away before you originally agreed to. Transferring your mortgage to another property is not an automatic right.

PBA

An Early Repayment Charge is part of the package you get when you sign up for a low rate mortgage. You chose to sign up for the deal and then you chose to pull out of it early - the bank didn't force you to move house. If you'd wanted a mortgage with no ERC then you could have arranged that at the outset, but then your monthly payment would have been higher.

I'm afraid your argument that the bank is profitable overall, therefore they should take a loss on your mortgage, doesn't really hold any water.

dunstonh

!!!!!!, next time you sign a contract, read the terms first. Or listen to your solcitor when he explains them to you (assuming you didnt shortcut that option and not get the solicitor to review the contract before you signed it).

Northern Rock still charged me £1250. What are my chances of getting some of this back almost 4 tears later from the greedy NR who have just posted 1/2 yr profits of £296m !!

The only greedy one here is you. You went for a deal that was no doubt cheaper than SVR (which has no tie in) and now you are trying to get money back you are not entitled to. Money that that would hit other borrowers if they were to pay it (which they wont).

MarkyMarkD

I'm a bit confused by the circumstances which led you to change lenders.

You say that NR wouldn't let you port the original mortgage product, but would have lent you the money on a different product with a new product fee? That doesn't make sense.

As long as your original mortgage was portable, and they were happy enough to lend you the relevant amount, they should have allowed you to port it.

If you have documentary evidence of both of the two facts above, and that they refused to allow the port, you should complain because they should have allowed you to port and hence not incur the ERC.

If they won't play ball and you have the evidence you should escalate it to the FOS once you reach deadlock.

homer_j_3

it could have been for an extension to the loan but I know that NR now will allow you to port and top up with the current product which is something many lenders will not let you do.

MarkyMarkD

Explain that again, homer_j?

I would have thought that the ONLY way for lenders to behave would be to allow you to top up with a current product offering.

homer_j_3

Northern Rocks current stance is that if you want to port your existing mortgage and they will permit you to borrow more then you can also do this on the same rate and product as the one you already have.

Most lenders do not let this happen, as you say they will let you top up with the current products available. This may have been NR approach at that time hence why they were asking for the fee.

Sorry if I didnt explain myself particularly well.

MarkyMarkD

I didn't realise that NR did that. It's pretty stupid of them, particularly given the way rates have been rising recently.

Obviously it was a great idea for them when rates were coming down.

homer_j_3

and obviously its a great idea for those who are existing clients.............who had lower rates. it pays sometimes to ignore short sightedness....

homer_j_3

and great for those clients wo join who think rates will rise further....